Oil Prices Climb as Venezuela Accuses US of Military Aggression
Reports of explosions in Caracas stoke fears of supply disruptions from the OPEC nation, though Washington has yet to comment on the allegations.
Crude oil prices rose in early trading on Saturday after reports of multiple explosions in the Venezuelan capital of Caracas were followed by accusations from President Nicolás Maduro’s government of “military aggression” by the United States.
The events have injected significant geopolitical risk into energy markets, raising concerns about the security of supply from the founding OPEC member. West Texas Intermediate (WTI) and Brent crude futures both ticked higher on the news, as traders priced in the potential for escalating conflict. The development follows a period of rising tensions, with the U.S. having just tightened sanctions on the nation's energy sector.
On the morning of January 3, 2026, multiple explosions and low-flying aircraft were reported over Caracas, according to international news reports. Shortly after, the Venezuelan government issued a statement condemning an alleged attack on military and civilian installations. As of Saturday morning, neither the Pentagon nor the U.S. State Department had issued a formal response to the claims.
This incident comes just a day after Washington intensified its economic pressure campaign against Caracas. On January 2, the U.S. sanctioned four companies and four tanker ships allegedly involved in a “shadow fleet” used to transport Venezuelan oil in violation of existing restrictions. This move was aimed at crippling the country's ability to export crude, its primary source of revenue.
While the prospect of direct military conflict involving an oil-producing state is rattling traders, the immediate impact on global supply may be limited. Venezuela's oil industry, once a powerhouse producing over 3 million barrels per day, has been hobbled by years of underinvestment, mismanagement, and sanctions. Current production capacity is estimated to be struggling, with some projections for 2026 forecasting output around 900,000 barrels per day.
Despite its diminished status, Venezuela sits on the world's largest proven oil reserves, and any potential for further disruption is being watched closely. The energy market is now in a holding pattern, awaiting an official comment from Washington to either confirm or deny the serious allegations. A denial could see prices stabilize, while any confirmation or further escalation could lead to a sustained rally in energy prices and increased volatility across the sector.